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Summary
It was a very interesting week in the plastics markets; uncertain contract pricing has lead to choppy spot resin trading. Right at the end of the month, several major Polyethylene producers pushed off the Jan $.06/lb price increase and will now look to implement it in February. This news jolted the market, some processors rushed to secure additional railcars at flat Jan contact prices (few were available), while elevated spot PE prices remained mostly steady since the beginning of February was practically already upon us. Spot Polypropylene prices surged another $.04/lb this past week, as strong spot monomer indicated sharply higher resin contracts for Feb - but they should ultimately be less steep than the $.22/lb initially nominated.
US energy markets had a down week; prices have been experiencing see-saw type action. March Crude Oil futures gave back more than the previous week’s gains, dropping $1.72/bbl to settle at $97.84/bbl on Friday. Natural Gas futures shook off the previous week’s short lived recovery, continuing lower to end the week at $2.499/mmBtu – a loss of $.257/mmBtu. The Crude Oil: Nat Gas price ratio expanded back out to more than 39:1.
The Ethylene market tallied another winning week, extending the streak to 7. Spot trading was very active with a number of deals seen in both the prompt and forward markets. Front month pricing traded $.02-.03/lb higher, with the most recent transaction for Feb delivery done at $.65/lb. While the entire forward curve has moved higher, the bulk of the gains have been in the nearest few months, which is when the majority of cracker turnarounds will take place. Ethane prices followed upstream Nat Gas lower, shedding about 10% to end the week at $.525/gal. With Ethane to Ethylene margins more than $.40/lb, producers will look to perform scheduled repairs expeditiously and bring their crackers back on line as soon as possible!!
Polyethylene contract negotiations went down to the wire and processors’ resistance paid off, scoring steady prices for January. There was barely time to celebrate this small victory, because February rolled in right behind and the $.06/lb increase was again back in play. To add a little fuel to the fire, a few producers nominated an additional $.07/lb increase for March. There was no big flurry of discounted month-end spot Polyethylene railcar offers as producers try to maintain upward pressure; however, the spot market is very well supplied by traders as long as the buyer is willing to pay their raised asking prices. Producer direct exports are reportedly still moving offshore at a very rapid clip, although exporters are generally not seeing material priced at such levels to enable high-volume spot sales.
The spot Propylene market continued to be active, trading a number of times as prices consolidated after rallying sharply during January. There were a couple of RGP spot deals; the most recent was at $.64/lb, the same as last week. A good amount of PGP supply emerged since prices have risen; several trades were done priced about steady at $.715/lb and additional material was offered at that level. February PGP contracts are poised to settle sharply higher, but nominations have relaxed a bit from the $.22/lb shocker to a still huge $.17/lb and could still wind up a tad less.
Spot Polypropylene prices rallied further, tacking on another $.04/lb, bringing the three week total to $.09/lb. Spot prices took off on the heels of rapidly rising monomer costs, which point to sharply higher contract prices for February. Price increase nominations for as much as $.22/lb were issued, subsequently $.17/lb was floated and buyers are still hopeful for a lower figure. While settlements have yet to occur, a double-digit gain will be seen. Fresh railcar offerings have been limited as producers would like to gain clarity on contracts, but some offgrade cars were still sold along the range of the $.70s/lb this past week. Traders have inventory, but are also reluctant to price it without understanding their replacement costs; Generic Prime HoPP in the spot market currently seems to be gravitating towards $.80/lb.
Resin contract price volatility defined spot resin trading this past week. Polyethylene buyers received a last-minute reprieve as January contracts ultimately rolled steady to December. Constant pressure remains since the $.06/lb increase is back in play for February contracts. While $.06/lb is nothing to sneer at, it pales to the double digit increase that Polypropylene buyers will endure. Most Polypropylene contracts are somehow tied to PGP monomer and those prices have been soaring. When the dust settles, Feb PP contracts will likely see an increase around $.15/lb, plus or minus a couple cents. There is quite a lot of action and the month has only just begun!!
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Total Offers
25,471,108 lbs
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Spot
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Contract
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| Resin | Total lbs | Low | High | Bid | Offer |
| LLDPE - Film | 4,371,500 | $.660 | $.750 | $.660 | $.700 |
| HDPE - Blow Mold | 4,228,788 | $.620 | $.700 | $.640 | $.680 |
| LDPE - Film | 4,147,844 | $.690 | $.810 | $.720 | $.760 |
| HDPE - Inj | 3,949,476 | $.630 | $.720 | $.650 | $.690 |
| PP Homo | 2,572,116 | $.720 | $.860 | $.740 | $.780 |
| HMWPE - Film | 2,394,600 | $.690 | $.740 | $.690 | $.730 |
| LDPE - Inj | 1,234,576 | $.690 | $.750 | $.710 | $.750 |
| LLDPE - Inj | 883,656 | $.660 | $.720 | $.690 | $.730 |
| PP Copo | 756,368 | $.700 | $.840 | $.760 | $.800 |
| GPPS | 468,184 | $.860 | $.890 | $.840 | $.890 |
| HIPS | 464,000 | $.930 | $.960 | $.940 | $.990 |
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